<PAGE>
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
COMMISSION FILE NO. 0-23635
CONDOR TECHNOLOGY SOLUTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1814931
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
170 JENNIFER ROAD, SUITE 325, ANNAPOLIS, MARYLAND 21401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(410) 266-8700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
OUTSTANDING AS OF
CLASS AUGUST 10, 2000
------- -----------------
COMMON STOCK, $.01 PAR VALUE 15,439,626
----------
--------------------------------------------------------------------------------
<PAGE>
CONDOR TECHNOLOGY SOLUTIONS, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets................................................................ 1
Consolidated Statements of Operations...................................................... 2
Consolidated Condensed Statements of Cash Flows............................................ 3
Notes to Consolidated Financial Statements................................................. 4-9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..................................................... 10-15
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK....................................................................... 16
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.......................................................................... 17
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ................................................. 18
Item 3. DEFAULTS UPON SENIOR SECURITIES............................................................ 18
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................................ 18
Item 5. OTHER INFORMATION.......................................................................... 18
Item 6. EXHIBITS AND REPORTS ON FORM 8-K........................................................... 18
SIGNATURES................................................................................................... 19
EXHIBIT INDEX................................................................................................ 20
</TABLE>
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
CONDOR TECHNOLOGY SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
--------- ---------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,137 $ 4,291
Restricted cash 2,584 5,616
Accounts receivable, net 29,281 23,798
Prepaids and other current assets 8,235 3,208
--------- ---------
Total current assets 43,237 36,913
PROPERTY AND EQUIPMENT, NET 8,235 7,252
GOODWILL AND OTHER INTANGIBLES, NET 66,422 58,920
OTHER ASSETS 2,026 2,057
--------- ---------
TOTAL ASSETS $ 119,920 $ 105,142
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,908 $ 10,037
Accrued expenses and other current liabilities 13,775 9,350
Deferred revenue 5,136 1,725
Current portion of contingent purchase liability 2,388 10,300
Current portion of long-term debt 45,505 44,669
--------- ---------
Total current liabilities 76,712 76,081
LONG-TERM DEBT 178 83
NON-CURRENT CONTINGENT PURCHASE LIABILITY 7,912 --
OTHER LONG-TERM OBLIGATIONS 1,303 1,151
--------- ---------
Total liabilities 86,105 77,315
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par, 1,000,000 authorized; none outstanding -- --
Common stock, $.01 par value; authorized 49,000,000 shares;
issued and outstanding, 15,078,864 shares at December 31, 1999
and 15,316,070 shares at June 30, 2000 151 153
Additional paid-in capital 123,142 124,377
Accumulated deficit (89,185) (96,528)
Accumulated other comprehensive loss (99) 19
Treasury stock, at cost (13,178 shares at December 31, 1999 and
June 30, 2000) (194) (194)
--------- ---------
Total stockholders' equity 33,815 27,827
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 119,920 $ 105,142
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
1
<PAGE>
CONDOR TECHNOLOGY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 2000 1999 2000
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
IT service revenues $ 36,305 $ 24,045 $ 75,054 $ 51,387
Hardware procurement revenues 17,139 7,470 38,080 16,484
--------- --------- --------- ---------
Total revenues 53,444 31,515 113,134 67,871
Cost of IT services 21,581 14,292 42,900 31,075
Cost of hardware procurement 15,599 6,795 34,379 14,769
--------- --------- --------- ---------
Total cost of revenues 37,180 21,087 77,279 45,844
--------- --------- --------- ---------
Gross profit 16,264 10,428 35,855 22,027
Selling, general and administrative expenses 14,166 9,046 25,811 21,358
Depreciation and amortization 2,333 1,468 4,492 2,939
Impairment of intangible assets 29,236 -- 29,236 --
Other costs 2,418 958 2,418 2,041
--------- --------- --------- ---------
Loss from operations (31,889) (1,044) (26,102) (4,311)
Interest and other expense, net (991) (1,707) (1,416) (3,032)
--------- --------- --------- ---------
Loss before income taxes (32,880) (2,751) (27,518) (7,343)
Provision for taxes (605) -- 1,754 --
--------- --------- --------- ---------
Net loss before extraordinary item (32,275) (2,751) (29,272) (7,343)
Extraordinary loss, net of income taxes of $122 (184) -- (184) --
--------- --------- --------- ---------
Net loss $ (32,459) $ (2,751) $ (29,456) $ (7,343)
========= ========= ========= =========
Basic shares outstanding 12,959 15,347 12,504 15,240
========= ========= ========= =========
Diluted shares outstanding 12,959 15,347 12,504 15,240
========= ========= ========= =========
Net loss per share before extraordinary item -
Basic & Diluted $ (2.49) $ (0.18) $ (2.34) $ (0.48)
========= ========= ========= =========
Net loss per share from extraordinary item -
Basic & Diluted $ (0.01) $ -- $ (0.02) $ --
========= ========= ========= =========
Net loss per share - Basic & Diluted $ (2.50) $ (0.18) $ (2.36) $ (0.48)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE>
CONDOR TECHNOLOGY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 2000
---- ----
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(29,456) $ (7,343)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Impairment of Goodwill 29,236 --
Extraordinary writeoff of deferred financiang costs 184 --
Depreciation and amortization 4,492 2,939
Writeoff of deferred financing costs -- 294
Stock compensation expense -- 1,137
Changes in assets and liabilities (5,812) 4,668
-------- --------
Net cash provided by (used in) operating activities (1,356) 1,695
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,114) (588)
Proceeds from sale of subsidiary -- 4,250
Proceeds from sale of equity securities -- 402
Employee Stock Purchase Plan -- 98
Acquisition of subsidiaries, net of cash (5,317) --
Payment of contingent purchase liability (7,000) --
Other (69) (306)
-------- --------
Net cash provided by (used in) investing activities (15,500) 3,856
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) on debt, net 20,682 (898)
Deferred financing costs (940) (585)
-------- --------
Net cash provided by (used in) financing activities 19,742 (1,483)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES (149) 118
NET INCREASE IN CASH AND CASH EQUIVALENTS
AND RESTRICTED CASH 2,737 4,186
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH,
BEGINNING OF PERIOD 5,809 5,721
-------- --------
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH,
END OF PERIOD $ 8,546 $ 9,907
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
CONDOR TECHNOLOGY SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
Condor Technology Solutions, Inc., a Delaware corporation (the
"Company"), was founded in August 1996. The Company is an information
technology ("IT") and e-commerce solutions provider to middle market
companies, Fortune 1000 firms and government agencies. In order to
become an end-to-end provider of a wide range of IT services and
solutions, Condor entered into the agreements (the "Mergers") to
acquire all of the outstanding stock of eight established IT service
providers (the "Founding Companies") and concurrently completed an
initial public offering (the "Offering") of its common stock (the
"Common Stock"). On February 5, 1998 and February 10, 1998,
respectively, the Offering and Mergers were completed.
Since February 10, 1998, the Company has acquired seven additional IT
service providers. The Founding Companies along with the additional
acquisitions are referred to herein as "Operating Companies". All
acquisitions have been accounted for using the purchase method of
accounting and are reflected as of their respective acquisition dates.
During 1999, the Company sold two of its Operating Companies and shut
down another one. In June 2000, the Company sold the Safari Solutions
Division of the Company.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial reporting and Securities and Exchange Commission
regulations. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management,
the financial statements reflect all adjustments (of a normal and
recurring nature) which are necessary to present fairly the financial
position, results of operations and cash flows for the interim periods.
The results for the three and six months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2000.
The financial statements should be read in conjunction with the
Company's audited consolidated financial statements included in the
Company's most recently filed Form 10-K.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
For a description of the Company's accounting policies, refer to the
Notes to the Financial Statements of the Company included in the
Company's most recently filed Form 10-K.
(3) UNCERTAINTY OF MEETING FUTURE COMMITMENTS
In April 1999, the Company entered into a $100 million syndicated
credit facility (the "Credit Facility") underwritten and arranged by a
major commercial bank (the "Bank") as discussed in Note 8. As part of
the Credit Facility, the Company must comply with various loan
covenants. At June 30, 2000, the Company had an outstanding balance of
$44.5 million borrowed under the Credit Facility.
In July 1999, the Company and the Bank entered into a forbearance
agreement with respect to the Company's noncompliance with certain
financial covenants of its Credit Facility. On March 1, 2000, the
Company and the Bank entered into the Fifth Amendment Agreement (the
"Fifth Amendment") extending the terms and conditions of forbearance
though February 28, 2001. On May 15, 2000, the Company entered into the
First Amendment to the Fifth Amendment Agreement (the "First Amendment
to the Fifth Amendment"). Under the terms and conditions of the Fifth
Amendment and the First Amendment to the Fifth Amendment, the Company
is required to permanently reduce the outstanding principal balance by
various amounts on or before certain dates
4
<PAGE>
and prior to February 28, 2001. In addition, the Company must
provide the Bank, on or before January 31, 2001, with a commitment
letter evidencing a refinancing, an asset sale, an equity infusion or
some other transaction generating sufficient cash proceeds to repay the
Bank in full on or prior to February 28, 2001.
In order to address the requirements of the Fifth Amendment and the
First Amendment to the Fifth Amendment, the Company is actively
pursuing an overall business plan that includes the potential
disposition of one or more of the Operating Companies in an orderly and
systematic fashion. The intended consequence of this business plan is
the settlement of the Credit Facility obligation. The implementation of
this business plan may result in one or more of the following: (1) the
disposal of the equity stock or assets of individual Operating
Companies; (2) the disposal of assets of partial and/or entire
divisions; and (3) the refinancing of the Company's remaining Credit
Facility obligation. Management intends to complete this business plan
no later than the end of February 2001. Accordingly, substantial doubt
currently exists about the Company's ability to meet its obligations
under the Fifth Amendment.
If unable to fully implement this business plan or obtain replacement
financing, the Company may experience material adverse financial
effects and its ability to continue as a going concern will depend upon
its ability to renegotiate its Credit Facility arrangement.
(4) ASSETS DISPOSED OF AND OTHER COSTS
ASSETS DISPOSED OF
As part of its overall business plan to settle the Credit Facility
obligation, on June 30, 2000 the Company consummated a transaction for
the sale of the assets of the Safari Solutions Division to an
independent third party. The total sales price is expected to be
approximately $12.3 million composed of $4.3 million in cash and $8.0
million in payments contingent on future sales revenue from Safari
Solutions product sales. At June 30, 2000, the $4.3 million was in an
escrow account and was classified as restricted cash on the Company's
balance sheet. The Company incurred approximately $0.8 million in
direct costs related to the sale.
Consistent with the Company's overall business plan, which contemplated
the sale of the Safari Solutions Division as well as other parts of the
Company, the December 31, 1999 goodwill impairment analysis took into
consideration this sale. Therefore, the value of the purchase price
received and the book value of the net liabilities sold were recorded
as a reduction to the Company's existing goodwill balance. The goodwill
balance was reduced by approximately $5.7 million.
Net revenues of the Safari Solutions Division for the three and six
months ended June 30, 2000 were $2.6 million and $5.3 million,
respectively. Loss from operations for the three and six months ended
June 30, 2000 was $0.1 million and $0.2 million, respectively.
RESTRUCTURING AND OTHER COSTS
During the three and six months ended June 30, 2000, the Company
recorded restructuring and other special charges of approximately $1.0
million and $2.0 million, respectively, which are included in other
costs on the consolidated statement of operations. Included in this
total are employee retention costs for restricted stock of $0.5 million
and $1.2 million for the three and six months, respectively, as
discussed in Note 5 and voluntary severance benefits of $0.5 million
and $0.8 million, respectively. The Company will pay all of these
severance benefits in 2000.
(5) RESTRICTED STOCK
During 1999, the Company granted restricted stock awards to certain key
employees to purchase shares of the Company's Common Stock at a
purchase price of $0.01 per share. During the three and six months
ended June 30, 2000, approximately 78,000 and 181,000 shares,
respectively, of
5
<PAGE>
unvested, restricted shares were forfeited by employees upon their
separation from the Company, and there were approximately 1.1 million
shares of restricted stock still outstanding at June 30, 2000.
The Company records compensation expense ratably over the vesting
period of the individual issues based on the current fair value of the
Common Stock. During the three and six months ended June 30, 2000, the
Company recorded retention costs of approximately $0.5 million and $1.2
million, respectively, related to restricted stock.
(6) EARNINGS PER SHARE
The Company calculates earnings per share ("EPS") on both a basic and
diluted basis. Dilutive securities are excluded from the computation in
periods which they have an anti-dilutive effect. Net income (loss)
available to common stockholders and common equivalent stockholders is
equal to net income (loss) for all periods presented. The weighted
average number of shares used in the calculation of EPS for the three
months ended June 30, 1999 and 2000 were 12,959,000 and 15,347,000,
respectively. The weighted average number of shares for the six months
ended June 30, 1999 and 2000 were 12,504,000 and 15,240,000,
respectively.
(7) COMPREHENSIVE INCOME
Comprehensive income includes net income and foreign currency
translation adjustments and is detailed as follows for the periods
presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- --------------------------
1999 2000 1999 2000
------------ ----------- ----------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Net income (loss) $(32,459) $ (2,751) $(29,456) $ (7,343)
Foreign currency translation adjustment (45) 168 (149) 118
-------- -------- -------- --------
Comprehensive income (loss) $(32,504) $ (2,583) $(29,605) $ (7,225)
======== ======== ======== ========
</TABLE>
(8) DEBT
In July 1999, the Company and the Bank entered into a forbearance
agreement with respect to the Company's noncompliance with certain
financial covenants of its Credit Facility. As of March 1, 2000, the
Company and the Bank entered a Fifth Amendment in which the Bank
extended their agreement of forbearance of their rights and remedies
under the Credit Facility through February 28, 2001. As of May 15,
2000, the Company and the Bank entered a First Amendment to the Fifth
Amendment. The Fifth Amendment and First Amendment to the Fifth
Amendment set forth certain permanent debt reduction requirements on or
before certain dates prior to February 28, 2001. The Company is
required to pay $8 million by August 1, 2000, $10 million by December
31, 2000, $50,000 each month from June to August 2000, $125,000 each
month beginning September 2000 and thereafter, and an extension fee of
$650,000. In addition, the Company's ability to obtain additional
advances under the Credit Facility will be limited during the
forbearance period. On July 27, 2000 the Bank agreed to accept a cash
payment of $2.7 million and the assignment of the contingent payments
related to the sale of the Safari Solutions Division in lieu of the
$8.0 million payment due on August 1, 2000.
As of June 30, 2000, the Company incurred approximately $0.6 million of
financing costs related to the renegotiation of the Company's credit
facility which is included in interest and other expense on the
statement of operations.
6
<PAGE>
(9) SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1999 2000
------- -----
(in thousands)
<S> <C> <C>
Cash paid during the year for:
Federal income tax payments $ 2,724 $ --
State income tax payments 1,101 6
Interest payments 1,236 2,491
Business acquisitions:
Cash paid for business acquisitions $ 6,550 $ --
Less cash acquired (1,133) --
------- -----
Cash paid for business acquisitions, net 5,417 --
Issuance of common stock for business acquisition 1,950 --
------- -----
Total purchase price 7,367 --
Purchase price in escrow 500 --
Less fair value of net assets acquired, net of cash 1,535 --
------- -----
Excess of fair value over net assets acquired $ 9,402 $ --
======= =====
</TABLE>
(10) SEGMENT REPORTING
The Company has four reporting segments: Consulting Solutions; System
Support Solutions; Government Solutions; and Enterprise Performance
Solutions ("EPS"). These four segments correspond to the Company's
divisional structure which was changed in the second quarter of 1999.
The financial information reported below for the six months ended June
30, 1999 has been conformed to the new divisional structure.
The Consulting Solutions division provides decision support, custom
application development, software package implementation, and contract
staffing and recruiting. These services involve the development of near
and long-term technology plans that help clients achieve specific
strategic business objectives and include IT needs analysis, technology
infrastructure design, future technology planning and refreshment,
systems architecture development, decision support planning and
analysis, and business process automation.
The System Support division provides customer management solutions and
support services, call center and help-desk operations, as well as a
complete array of desktop systems maintenance and support services to
its clients, including hardware and software maintenance, systems
testing and engineering, and hardware procurement.
The Government Solutions division offers its public sector clients a
variety of management consulting services, interactive media services,
system maintenance and hardware procurement.
The EPS division offers its clients a single source for enterprise
resource planning and e-commerce solutions focusing on implementation
and consulting related to the SAP, Peoplesoft and Trilogy software
packages. The Division focuses on the following service lines:
installation, business process design, configuration and
implementation, and staff augmentation.
The accounting policies of the reporting segments are the same as those
described in Note 2. The Company evaluates the performance of its
operating segments based on operating income after intercompany
transactions have been eliminated. The "Other" column includes the
operating results of the Safari Solutions Division which was sold as of
June 30, 2000, and corporate related items not allocated to the
divisions. For the six months ended June 30, 1999, "Other" includes the
operations
7
<PAGE>
of two operating companies sold in October, 1999 and one operating
company shut down in the second quarter of 1999.
Selling, general and administrative costs incurred by the Company's
corporate office have been allocated to the divisions and "Other"
proportionately, based on total revenue and total assets. In addition,
the impairment of intangible assets recorded in 1999 has been allocated
to the Consulting Solutions, System Support, EPS and "Other" segments
for the six months ended June 30, 2000.
Summarized financial information concerning the Company's reportable
segments is shown in the following tables (in thousands).
For the six months ended June 30, 2000:
<TABLE>
<CAPTION>
CONSULTING SYSTEM GOVERNMENT
SOLUTIONS SUPPORT SOLUTIONS EPS OTHER CONSOLIDATED
----------- ------------ ------------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
IT service revenues $ 11,412 $ 9,444 $ 10,724 $ 14,529 $ 5,278 $ 51,387
Hardware procurement
revenues -- 15,624 860 -- -- 16,484
---------- ------------- ------------- ----------- ------------ --------------
Total revenues $ 11,412 $ 25,068 $ 11,584 $ 14,529 $ 5,278 $ 67,871
---------- ------------- ------------- ----------- ------------ --------------
Income (loss) from operations $ (1,837) $ 1,489 $ 1,066 $ (2,595) $ (2,434)(a) $ (4,311)
---------- ------------- ------------- ----------- ------------ --------------
Total assets $ 11,422 $ 23,045 $ 39,138 $ 19,821 $ 11,716 $ 105,142
---------- ------------- ------------- ----------- ------------ --------------
</TABLE>
For the six months ended June 30, 1999:
<TABLE>
<CAPTION>
CONSULTING SYSTEM GOVERNMENT
SOLUTIONS SUPPORT SOLUTIONS EPS OTHER CONSOLIDATED
---------- ------------- ------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
IT service revenues $ 16,126 $ 13,208 $ 13,357 $ 21,813 $ 10,550 $ 75,054
Hardware procurement
revenues -- 14,860 8,300 -- 14,920 38,080
---------- ------------- ------------- ----------- ------------ ---------------
Total revenues $ 16,126 $ 28,068 $ 21,657 $ 21,813 $ 25,470 $ 113,134
---------- ------------- ------------- ----------- ------------ ---------------
Income (loss) from operations $ (688) $ 3,897 $ 3,636 $ (126) $ (32,821) (b) $ (26,102)
----------- ------------ ------------- ----------- ------------ ---------------
Total assets $ 35,023 $ 26,253 $ 40,256 $ 57,606 $ 24,869 $ 184,007
---------- ------------- ------------- ----------- ------------ ---------------
</TABLE>
----------------------------------
(a) Includes Other costs of $2.0 million.
(b) Includes Impairment of intangible assets and other charges of $31.7 million.
8
<PAGE>
(11) COMMITMENTS AND CONTINGENCIES
In the course of Condor's consolidation efforts, SCM LLC d/b/a The
Commonwealth Group ("Commonwealth"), the promoter of the Offering, and
Condor negotiated with Emtec, Inc. ("Emtec"), an IT service company
based in Pennsylvania, with a view to Emtec becoming one of the
Founding Companies. As part of the process, Emtec's investment banker
and Commonwealth executed two confidentiality agreements pursuant to
which each agreed, among other things, not to disclose certain
confidential information and Commonwealth agreed that it would not seek
to enter into a business transaction with any companies to be
introduced to it by Emtec's investment banker for a period of two years
without such investment banker's prior written consent. On October 28,
1997, Emtec filed a Complaint in the United States District Court for
the Eastern District of Pennsylvania against Condor, Commonwealth, J.
Marshall Coleman, a Managing Director of Commonwealth and the former
Chairman of the Board of Condor, and Kennard F. Hill, the Company's
Chairman of the Board and Chief Executive Officer, captioned EMTEC,
INC. V. CONDOR TECHNOLOGY SOLUTIONS, INC., SCM LLC, ET AL., Civil No.
97-6652. The complaint alleged breach of contract, tortuous
interference with Emtec's business relationship with Corporate Access,
Inc. ("Corporate Access") and Computer Hardware Maintenance Corporation
("CHMC"), two of the Founding Companies, and misappropriation of a
trade secret arising out of the participation of CHMC and Corporate
Access in the consolidation and the Offering without Emtec's written
consent. In connection with the three causes of action, Emtec demanded
that the defendants disgorge the financial benefits that they have and
will obtain as a result of their alleged breach of contract and seeks
compensatory and punitive damages. On December 31, 1997, the defendants
filed an Answer, denying the allegations and asserting various
affirmative defenses. The court denied Emtec's motion to amend the
complaint to add a claim of unjust enrichment. A motion by Condor for
partial summary judgment was granted in part to eliminate Emtec's claim
for misappropriation of a trade secret and later Emtec stipulated to a
dismissal of its claim of tortuous interference with business
relations, and to the removal of both Mr. Coleman and Mr. Hill as
defendants in the suit. On June 20, 2000, Condor issued Emtec 250,000
shares of its Common Stock to settle the litigation.
The Company is a party to other legal proceedings and disputes related
to the Company's day to day business operations, none of which, in the
opinion of management, are material to the financial position or
results of operations of the Company. Therefore, there is no reserve
for legal contingency recorded at June 30, 2000.
(12) CONTINGENT PURCHASE LIABILITIES
The Company is obligated to issue shares of Common Stock and pay cash
under the contingent payment provisions of certain purchase agreements,
as amended, related to the acquisition of three of the Operating
Companies. At June 30, 2000, the Company has accrued approximately
$10.3 million; of the total amount accrued, the Company is past due on
approximately $7.9 million of payments.
As to the share portion which is past due ($4,845,000 in
aggregate), one of the purchase agreements calls for valuation of the
shares based on certain NASDAQ National Market prices in March 2000.
Assuming the use of the closing prices of the Common Stock on the OTC
bulletin board for this purpose, 1,469,800 shares of Common Stock would
be issuable as contingent consideration under that agreement. Another
purchase agreement calls for valuing the shares using NASDAQ National
Market prices or in their absence, an appraiser. Assuming the appraiser
appraised the value of such shares as of March 30, 2000 (the date set
for issuance) and that the appraiser used the closing price of the
Common Stock on the OTC bulletin board, 2,952,637 shares of Common
Stock would be issuable as contingent consideration. With respect to
the cash portion of the contingent consideration which is past due
($3.1 million in aggregate), the Company has notified the recipients
that it is unable to pay such amount at this time.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion is qualified in its entirety by reference to and should
be read in conjunction with the Annual Report on Form 10-K of the Company for
its fiscal year ended December 31, 1999 (the "Form 10-K"). A number of
statements in this Quarterly Report on Form 10-Q address activities, events or
developments which the Company anticipates may occur in the future, including
such matters as the Company's strategy for internal growth, additional capital
expenditures (including the amount and nature thereof), acquisitions of assets
and businesses, industry trends and other such matters. For a discussion of
important factors which could cause actual results to differ materially from the
forward-looking statements see "Special Note Regarding Forward Looking
Statements."
INTRODUCTION
The Company earns revenues from providing IT services and hardware procurement.
The Company recognizes IT service revenues using formulas based on time and
materials, whereby revenues are recognized as costs are incurred at agreed-upon
billing rates. For projects billed on a fixed-price basis, revenue is recognized
using the percentage of completion method. Percentage of completion is
determined using total costs as a cost input measure. Revenues from license fees
on proprietary software are recognized when a non-cancelable license agreement
has been signed, the product has been delivered, collection is probable and all
significant obligations relating to the license have been satisfied. There are
no significant post-sales support obligations related to the Company's license
fees. Revenues from hardware procurement are recognized upon shipment or
acceptance of the equipment. When installation services are an integral
component of the hardware procurement, revenue is recognized at the customer's
acceptance of the equipment.
Cost of revenues includes the provision of services and material directly
related to the revenues, costs of acquisition of hardware resold to clients,
subcontracted labor or other outside services and other direct costs associated
with revenues, as well as an allocation of certain indirect costs.
Selling, general and administrative costs include salaries, benefits,
commissions payable to the Company's sales and marketing personnel, recruiting,
finance and other general and administrative costs.
In July 1996, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 97 ("SAB 97") relating to business combinations immediately prior
to an initial public offering. SAB 97 requires that these combinations be
accounted for using the purchase method of acquisition accounting. Condor was
identified as the "accounting acquiror" for financial statement presentation
purposes.
RESULTS OF OPERATIONS
The Company's consolidated financial statements have been prepared based on
accounting for all companies acquired using the purchase method of acquisition
accounting. The financial statements include operations of the Operating
Companies from their respective dates of acquisition.
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UNAUDITED CONSOLIDATED RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000
AND 1999
The following table sets forth certain selected financial data for the Company
and as a percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
---------------------------------------------------------
1999 2000
--------------------------- --------------------------
(in thousands, except percentages)
<S> <C> <C> <C> <C>
IT service revenues $ 36,305 67.9% $ 24,045 76.3%
Hardware procurement revenues 17,139 32.1% 7,470 23.7%
----------- ------------ ----------- -----------
Total revenues 53,444 100.0% 31,515 100.0%
----------- ------------ ----------- -----------
Cost of IT services 21,581 59.4% 14,292 59.4%
Cost of hardware procurement 15,599 91.0% 6,795 91.0%
----------- -----------
Total cost of revenues 37,180 69.6% 21,087 66.9%
----------- -----------
Gross profit 16,264 30.4% 10,428 33.1%
Selling, general and administrative expenses 14,166 26.5% 9,046 28.7%
Depreciation and amortization 2,333 4.4% 1,468 4.7%
Impairment of intangible assets 29,236 54.7% -- --
Other costs 2,418 4.5% 958 3.0%
----------- ------------ ----------- -----------
Income (loss) from operations $ (31,889) (59.7)% $ (1,044) (3.3)%
=========== ============ =========== ===========
</TABLE>
REVENUES. Revenue decreased $21.9 million or 41.0%, from $53.4 million for the
three months ended June 30, 1999 to $31.5 million for the three months ended
June 30, 2000. IT service revenue decreased approximately $12.2 million, or
33.8%, and hardware procurement revenue decreased $9.7 million, or 56.4%.
IT service revenue decreased through all of the Company's divisions. The
Government Solutions division revenue decline was primarily attributable to
reduced maintenance revenue as well as a reprocurement of a large government
contract at a reduced revenue rate. The EPS division experienced a decline in
the ERP market beginning in the second half of 1999. The Consulting Solutions
division revenue decline was primarily attributable to the shut down of MST's
operations due to the loss of a large insurance client during the second quarter
of 1999 as well as a decline in contract staffing and recruiting placement. The
System Solutions Division revenue decrease was primarily the result of the
reprocurement of a large call center contract for a five year period at a
reduced revenue rate. Additionally, the Safari Solutions unit experienced a
decrease in sales of the Company's Safari software licenses.
The decrease in hardware procurement revenue was primarily attributable to the
sale of U.S. Communications, Inc. and Corporate Access, Inc. in October 1999,
fluctuations in product delivery and the shift in the Company's focus from
hardware procurement to higher margin IT service revenues.
COST OF REVENUES. Cost of revenues decreased $16.1 million or 43.3% from $37.2
million for the three months ended June 30, 1999 to $21.1 million for the three
months ended June 30, 2000. This decrease is primarily attributable to the
revenue decline discussed above. Cost of revenues as a percentage of revenues
decreased from 69.6% of revenues for the three months ended June 30, 1999 to
66.9% for the three months ended June 30, 2000. This decrease was primarily a
result of the increase in service revenues as a percentage of total revenues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $5.1 million, or 36.1%, from $14.2 million to
$9.0 million for the three months
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ended June 30, 1999 and 2000, respectively. This decrease is a result of the
sale of two Operating Companies and the shutdown of MST in 1999 as well as the
effect of cost reduction programs initiated by the Company in 2000. Selling,
general and administrative costs increased from 26.5% of revenues to 28.7% of
revenues for the three months ended June 30, 1999 and 2000, respectively.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased $0.9
million or 37.1%, from $2.3 million for the three months ended June 30, 1999 to
$1.5 million for the three months ended June 30, 2000. The decrease is primarily
attributable to a reduction in amortization expense related to the impairment of
goodwill recorded in 1999.
OTHER COSTS. Other costs for the three months ended June 30, 2000 include
retention costs of $0.5 million and voluntary severance and other costs of $0.5
million. Other costs for the three months ended June 30, 1999 include
restructuring costs of $1.4 million, contract losses of $0.8 million, and
voluntary severance and other costs of $0.2 million.
The following table sets forth certain selected financial data for the Company
and as a percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------------------------------------
1999 2000
--------------------------- --------------------------
(in thousands, except percentages)
<S> <C> <C> <C> <C>
IT service revenues $ 75,054 66.3% $51,387 75.7%
Hardware procurement revenues 38,080 33.7% 16,484 24.3%
----------- ------------ ----------- -----------
Total revenues 113,134 100.0% 67,871 100.0%
----------- ------------ ----------- -----------
Cost of IT services 42,900 57.2% 31,075 60.5%
Cost of hardware procurement 34,379 90.3% 14,769 89.6%
----------- -----------
Total cost of revenues 77,279 68.3% 45,844 67.5%
----------- -----------
Gross profit 35,855 31.7% 22,027 32.5%
Selling, general and administrative expenses 25,811 22.8% 21,358 31.6%
Depreciation and amortization 4,492 4.0% 2,939 4.3%
Impairment of intangible assets 29,236 25.8% -- --
Other costs 2,418 2.1% 2,041 3.0%
----------- ------------ ----------- -----------
Income (loss) from operations $ (26,102) (23.0)% $ (4,311) (6.4)%
=========== ============ =========== ===========
</TABLE>
REVENUES. Revenue decreased $45.3 million or 40.0%, from $113.1 million for the
six months ended June 30, 1999 to $67.9 million for the six months ended June
30, 2000. IT service revenue decreased approximately $23.7 million, or 31.5%,
and hardware procurement revenue decreased $21.6 million, or 56.7%.
IT service revenue decreased through all of the Company's divisions. The
Government Solutions division revenue decline was primarily attributable to
reduced maintenance revenue as well as a reprocurement of a large government
contract at a reduced revenue rate. The EPS division experienced a decline in
the ERP market beginning in the second half of 1999. The Consulting Solutions
division revenue decline was primarily attributable to the shut down of MST's
operations due to the loss of a large insurance client during the second quarter
of 1999 as well as a decline in contract staffing and recruiting placement. The
System Solutions Division revenue decrease was primarily the result of the
reprocurement of a large call center contract for a five year period at a
reduced revenue rate. Additionally, the Safari Solutions unit has experienced a
decrease in sales of the Company's Safari software licenses.
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The decrease in hardware procurement revenue was primarily attributable to the
sale of U.S. Communications, Inc. and Corporate Access, Inc. in October 1999,
fluctuations in product delivery and the shift in the Company's focus from
hardware procurement to higher margin IT service revenues.
COST OF REVENUES. Cost of revenues decreased $31.4 million or 40.7% from $77.3
million for the six months ended June 30, 1999 to $45.8 million for the six
months ended June 30, 2000. This decrease is primarily attributable to the
revenue decline discussed above. Cost of revenues as a percentage of revenues
decreased from 68.3% of revenues for the six months ended June 30, 1999 to 67.5%
for the six months ended June 30, 2000. This decrease was primarily a result of
the increase in service revenues as a percentage of total revenues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $4.5 million or 17.3%, from $25.8 million to
$21.4 million for the six months ended June 30, 1999 and 2000, respectively.
This decrease is a result of the sale of two Operating Companies and the
shutdown of MST in 1999 as well as the effect of cost reduction programs
initiated by the Company in 2000. Selling, general and administrative costs
increased from 22.8% of revenues to 31.5% of revenues for the six months ended
June 30, 1999 and 2000, respectively.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased $1.6
million or 34.6%, from $4.5 million for the six months ended June 30, 1999 to
$2.9 million for the six months ended June 30, 2000. The decrease is primarily
attributable to a reduction in amortization expense related to the impairment of
goodwill recorded in 1999.
OTHER COSTS. Other costs for the six months ended June 30, 2000 include
retention costs of $1.2 million and voluntary severance and other costs of $0.8
million. Other costs for the six months ended June 30, 1999 include
restructuring costs of $1.4 million, contract losses of $0.8 million, and
voluntary severance and other costs of $0.2 million.
LIQUIDITY AND CAPITAL RESOURCES
Condor is a holding company that conducts its operations though its
subsidiaries. Accordingly, the Company's principal sources of liquidity are the
cash flows of its operating divisions and cash available from its credit
facilities. At June 30, 2000, the Company had $4.3 million in cash and cash
equivalents and $44.8 million of indebtedness outstanding, which consists
primarily of borrowings on its credit facility (the "Credit Facility").
In accordance with its Credit Facility, the Company must comply with various
loan covenants including: (i) maintenance of certain financial performance
ratios; (ii) limits on capital expenditures; (iii) restrictions on additional
indebtedness; (iv) restrictions on liens, guarantees, advances and dividends;
and (v) restrictions on the type, size and number of acquisitions.
In July 1999, the Company and the Bank entered into a forbearance agreement with
respect to the Company's noncompliance with certain financial covenants of its
Credit Facility. As of March 1, 2000, the Company and the Bank entered a Fifth
Amendment in which the Bank extended their agreement of forbearance of their
rights and remedies under the Credit Facility through February 28, 2001. As of
May 15, 2000, the Company and the Bank entered a First Amendment to the Fifth
Amendment. The Fifth Amendment and First Amendment to the Fifth Amendment set
forth certain permanent debt reduction requirements on or before certain dates
prior to February 28, 2001. The Company is required to pay $8 million by August
1, 2000, $10 million by December 31, 2000, $50,000 each month from June to
August 2000, $125,000 each month beginning September 2000 and thereafter, and an
extension fee of $650,000. In addition, the Company's ability to obtain
additional advances under the Credit Facility will be limited during the
forbearance period. On July 27, 2000, the Bank agreed to accept a cash payment
of $2.7 million and the assignment of the
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contingent payments related to the sale of the Safari Solutions Division in lieu
of the $8.0 million payment due on August 1, 2000.
In order to address the requirements of the Fifth Amendment and the First
Amendment to the Fifth Amendment, the Company is actively pursuing an overall
business plan that includes the potential disposition of one or more of the
Operating Companies in an orderly and systematic fashion. The intended
consequence of this business plan is the settlement of the Credit Facility
obligation. The implementation of this business plan may result in one or more
of the following: (1) the disposal of the equity stock or assets of individual
Operating Companies; (2) the disposal of assets of partial and/or entire
divisions; and (3) the refinancing of the Company's remaining Credit Facility
obligation. Management intends to complete this business plan no later than the
end of February 2001.
If unable to fully implement this business plan or negotiate a new agreement
with existing lenders or obtain replacement financing, the Company may
experience material adverse financial effects and its ability to continue as a
going concern may be impaired.
In December 1999, the Company's Common Stock was delisted by the Nasdaq National
Market. Currently the Company's Common Stock is being quoted on the Nasdaq OTC
Bulletin Board.
Net cash provided by operating activities was $1.7 million for the six months
ended June 30, 2000. Net cash provided by investing activities was $3.9 million
for the six months ended June 30, 2000, which included $4.3 million provided by
the sale of the Safari Solutions Division and $0.4 million by the sale of equity
securities, offset by $0.8 million used for purchases of property, equipment and
other costs.
Net cash used in financing activities was $1.5 million for the six months ended
June 30, 2000, which is comprised of debt repayments of $0.9 million and
outflows for deferred financing costs of $0.6 related to the Company's Credit
Facility.
YEAR 2000 ISSUE UPDATE
The Company did not experience any significant malfunctions or errors in its
operating or business systems when the date changed from 1999 to 2000. Based on
operations since January 1, 2000, the Company does not expect any significant
impact to its on-going business as a result of the "Year 2000 issue." However,
it is possible that the full impact of the date change, which was of concern due
to computer programs that use two digits instead of four digits to define years,
has not been fully recognized. The Company believes that any such problems are
likely to be minor and correctable. The Company currently is not aware of any
significant Year 2000 or similar problems that have arisen for its customers and
suppliers.
The Company expended $1.8 million on Year 2000 readiness efforts during 1999.
These efforts included costs of implementing the Company's Year 2000 compliant
ERP accounting and management system, replacing some outdated, non-compliant
hardware and non-compliant software as well as identifying and remediating Year
2000 problems.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Statements in this Form 10-Q based on current expectations that are not strictly
historical statements, such as the Company's or management's intentions, hopes,
beliefs, expectations, strategies, or predictions, are forward-looking
statements. Such statements, or any other variation thereof regarding the
Company's future activities or other future events or conditions within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended, are intended to be covered by the safe harbors
for forward-looking statements created thereby. Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the sufficiency of the Company's working capital and the ability of
the
14
<PAGE>
Company to realize benefits from consolidating certain general and
administrative functions, to pursue strategic acquisitions and alliances, to
retain management and to implement its focused business strategy, to leverage
consulting services, secure full-service contracts, to expand client
relationships, successfully recruit, train and retain personnel, expand services
and geographic reach and successfully defend itself in ongoing and future
litigation.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK. The Company is exposed to market risk from adverse changes in
interest rates and foreign currency exchange rates.
INTEREST RATE RISKS. The Company is exposed to risk from changes in interest
rates as a result of its borrowing activities. At June 30, 2000, the Company had
total debt of $44.8 million of which $44.5 million represents borrowings on its
Credit Facility at a variable interest rate. Management does not believe that
the Company's exposure to interest rate fluctuations is material.
FOREIGN CURRENCY EXCHANGE RISK. The Company's international operations are
subject to foreign exchange rate fluctuations. The Company derived approximately
2% of its revenue for the six months ended June 30, 2000 from services performed
in the Netherlands, Germany and Mexico. Management does not believe that the
Company's exposure to foreign currency rate fluctuations is material.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the course of Condor's consolidation efforts, SCM LLC d/b/a The
Commonwealth Group ("Commonwealth"), the promoter of the Offering, and
Condor negotiated with Emtec, Inc. ("Emtec"), an IT service company
based in Pennsylvania, with a view to Emtec becoming one of the
Founding Companies. As part of the process, Emtec's investment banker
and Commonwealth executed two confidentiality agreements pursuant to
which each agreed, among other things, not to disclose certain
confidential information and Commonwealth agreed that it would not seek
to enter into a business transaction with any companies to be
introduced to it by Emtec's investment banker for a period of two years
without such investment banker's prior written consent. On October 28,
1997, Emtec filed a Complaint in the United States District Court for
the Eastern District of Pennsylvania against Condor, Commonwealth, J.
Marshall Coleman, a Managing Director of Commonwealth and the former
Chairman of the Board of Condor, and Kennard F. Hill, the Company's
Chairman of the Board and Chief Executive Officer, captioned EMTEC,
INC. V. CONDOR TECHNOLOGY SOLUTIONS, INC., SCM LLC, ET AL., Civil No.
97-6652. The complaint alleged breach of contract, tortuous
interference with Emtec's business relationship with Corporate Access,
Inc. ("Corporate Access") and Computer Hardware Maintenance Corporation
("CHMC"), two of the Founding Companies, and misappropriation of a
trade secret arising out of the participation of CHMC and Corporate
Access in the consolidation and the Offering without Emtec's written
consent. In connection with the three causes of action, Emtec demanded
that the defendants disgorge the financial benefits that they have and
will obtain as a result of their alleged breach of contract and seeks
compensatory and punitive damages. On December 31, 1997, the defendants
filed an Answer, denying the allegations and asserting various
affirmative defenses. The court denied Emtec's motion to amend the
complaint to add a claim of unjust enrichment. A motion by Condor for
partial summary judgment was granted in part to eliminate Emtec's claim
for misappropriation of a trade secret and later Emtec stipulated to a
dismissal of its claim of tortuous interference with business
relations, and to the removal of both Mr. Coleman and Mr. Hill as
defendants in the suit. On June 20, 2000 Condor issued Emtec 250,000
shares of its Common Stock to settle the litigation.
The Company is a party to other legal proceedings and disputes related
to the Company's day to day business operations, none of which, in the
opinion of management, are material to the financial position or
results of operations of the Company.
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ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders on May 16, 2000, the following proposals
were adopted by the margins indicated:
1. To elect three Class II Directors, each for a term of three years and
until their respective successors have been elected and qualified.
For Withheld
Kennard F. Hill 9,916,932 1,211,883
Ann Torre Grant 10,112,283 1,016,532
William M. Newport 10,112,283 1,016,532
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for 2000.
For 10,895,229
Against 203,455
Abstain 30,131
3. To ratify the adoption of the 2000 Employee Stock Purchase Plan.
For 10,689,737
Against 404,775
Abstain 34,303
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (see index on page 18)
(b) Reports on Form 8-K:
The Company filed the following:
(1) Form 8-K Current Report on March 1, 2000 related to the Fifth
Amendment Agreement.
(2) Form 8-K Current Report on June 5, 2000 related to the First
Amendment to Fifth Amendment Agreement.
(3) Form 8-K Current Report on July 19, 2000, related to divestiture
of Safari Solutions Division.
(4) Form 8-K Current Report on August 4, 2000 related to a Letter
Agreement between the Company and its Lenders.
(5) Form 8-K Current Report on August 9, 2000 related to change in
registrant's certifying accountant.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONDOR TECHNOLOGY SOLUTIONS, INC.
Date August 14, 2000 By: /s/ Kennard F. Hill
-------------------------- -----------------------------------
Kennard F. Hill
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
Date August 14, 2000 By: /s/ W. M. Robbins
------------------------- ------------------------
W. M. Robbins
VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
19
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EXHIBIT INDEX
Exhibit
Number Description
------ -----------
27 Financial Data Schedule for the three and six months ended
June 30, 2000.
20
